Kroger (Kroger (KR)) is having a rough Thursday morning. The grocery giant reported mixed first-quarter results that sent shares tumbling more than 10% in premarket trading. The headline numbers tell the story: revenue came in stronger than expected at $46.12 billion, beating the $45.47 billion consensus, but adjusted earnings of $1.58 per share narrowly missed the $1.59 analysts were looking for.
That earnings miss stings, but the real pain might be in the details. Gross margin shrank to 22.7% from 23.0% a year ago. Kroger blamed a higher mix of fuel sales, increased transportation costs, egg deflation, and planned price investments. In other words, the company is feeling pressure from multiple directions at once.
On the bright side, identical sales excluding fuel rose 1.0% year over year, and adjusted eCommerce sales jumped 19%. Kroger Precision Marketing, its advertising business, saw profits climb more than 20%. The company also noted its board approved an additional $2 billion share repurchase program in December 2025, with buybacks expected to be completed by the end of fiscal 2026.
Looking ahead, Kroger affirmed its fiscal 2026 outlook for identical sales growth of 1% to 2% and adjusted earnings of $5.10 to $5.30 per share. That range brackets the Wall Street consensus of $5.27, but the low end leaves little room for error. The company also maintained its forecasts for FIFO operating profit of $5.0 billion to $5.2 billion, free cash flow of $2.7 billion to $2.9 billion, and capital expenditures of $3.8 billion to $4.0 billion.
Investors, however, seem focused on the near-term pressures. Kroger shares were down 10.36% at $55.88 in premarket trading. The market is sending a clear message: in a world of rising costs and cautious consumers, even a grocery giant can't afford to stumble.
